Binance, the world's largest cryptocurrency exchange by market volume, has started over-the-counter (OTC) trading services.
The volume of transactions inside the cryptocurrency exchange is on the decrease due to a weakening cryptocurrency market, while OTC transactions made directly between two parties are gradually growing. As the liquidity of regular cryptocurrency exchanges has fallen on the decline in cryptocurrency prices, companies which seek to make large-scale cryptocurrency transactions are offering cryptocurrency OTC services.
The cryptocurrency OTC market has a high level of attractiveness since it attracts mostly large and institutional investors, which want block trading, just like existing stock and bond markets where transactions on exchange and on the third market are all made.
Unlike existing cryptocurrency exchanges, the cryptocurrency OTC market offers a high level of transaction convenience as it deals mainly with fiat money, including the Korean won and the U.S. dollar. Accordingly, companies that strictly follow the customer confirmation duty, such as user authentication based on know your customer (KYC), and the anti-money laundering (AML) laws, are taking the leadership in the OTC market based on customer confidence.
For instance, Circle, which was invested by global investment bank Goldman Sachs, made US$24 billion (26.88 trillion won) worth of transactions in 36 countries in the OTC market last year, according to Chain Partners' CP Research and industry sources on Jan. 27.
In addition, 25 percent of the total cryptocurrency transactions volume worth US$160 billion (US$142.86 million) in December last year were traded on the OTC platform. In addition to Circle, Octagon Strategy Ltd. (OSL), Cumberland and Huobi are active in the cryptocurrency OTC market, and Chain Partners' OTC, which consists of famous analysts at home and abroad, is also engaged in OTC trading in compliance with the government’s various guidelines and the Foreign Exchange Control Act, including OTC market operation regulations.
Binance, the world's largest cryptocurrency exchange, has recently jumped into OTC trading. In particular, Binance allows users to make OTC transactions with existing accounts.